Both July and August turned out to be brilliant months for us in Norwich as we had both hoped and forecast. This was in line with market trends as shown by the recently published Homelet Rental Index for July 2013. Here are the Stats for East Anglia:-
Average Rent July 2013
Average Rent June 2013
Average Rent July 2013
Compared to other regions in England, we definitely fared better than most and with house prices starting to creep up, landlords are seeing some solid returns.
New mortgage lending is on the march again and after the hiatus of recent years, it looks like the lenders are coming back to the market with a vengeance. The headline in the Telegraph last week was something along the lines of "Mortgage Lending Now Back To Pre-Crash Levels". Much of that will be to Buy To let Investors as well as to first time buyers taking advantage of the Help to Buy Scheme. In time and its debatable how soon we'll see it, this increase in the supply of rental property coupled with a decrease in tenants (as they become buyers) must have an adverse impact on the lettings market. That doesn't mean to say that holding onto your investment property, or adding to the portfolio is necessarily a bad thing because as we've noted, landlords are seeing (and will continue to see) really good returns. However, here are some basic tips to ensure your property business continues to flourish:-
1). Take a long hard look at the type of property you have and its location. Is it going to withstand a drop in tenant demand? Norwich is and will continue to be an extremely vibrant rental City but if demand drops, rents will come down and tenants will gravitate to the better properties in better locations. You can always make your property better and indeed to get the best market rent and the best quality of tenant, keeping the property up to snuff is a prerequisite. However, there's little you can do about a poor location, so take advantage of a buoyant market and consider selling now! (Be aware of your CGT position though).
2). Everyone wants good tenants but as the supply of rental properties increases you will be competing head-on with every other Landlord. Make sure you win by keeping the property in very good condition, keep the rent at a reasonable level and for the right tenant offer a longer term tenancy to keep them at the property longer.
3) Avoid the void! An empty property between lets is a very expensive proposition - No rent and all of the bills back on your plate. By following Tip 2 and by ensuring you keep on top of any property maintenance issues, you'll ensure a happy set of tenants and thereby a longer more profitable tenancy. Inevitably though there will be a time when your tenants want to move on and you need to ensure it is remarketed with a good lead time and shown in its best possible light. Take a look at how we market properties to let Click Here.
4) If you're thinking of buying or adding to your portfolio, firstly consider very carefully your investment aims taking into account your short and longer term needs. Do you want a high yielding property, just capital growth or a mix of yield and growth. Are you going to put a mortgage in place. What is your risk appetite. How is it going to affect your tax position. Once you've considered these and have a firm set of goals in mind, this will shape what type of property to buy. As to where to buy it, get some independent advice - a good specialist letting agent whose been around for a while will know the locations that are consistently in demand whatever the state of the market. Be wary of the estate agent trying to sell a property on behalf of their client. They don't get paid unless they close a sale so their advice may be biased - best not to take chances, speak with a lettings professional.
5) Unless you're a property trader, property investment is for the medium to long term so a good property in a good location will provide you with a successful profitable business which will stand the test of time.